‘

s
WHEN Bangalore-based Prateek Apparels, a CEO service against a fee. The company, with
leading supplier of ready-made garments to its three founding partners and 15 associate
fashion brands like Levi’s, Wrangler and Van partners, focuses on the outsourced CEO
Heusen in India, wanted to launch a discount practice with 60% of revenues coming from
retail chain in mid-2007 its promoters were in this offering with corporate finance services.
a quandary. “We had capabilities in design, They sign up for a tenure of 3-5 years with a
sourcing, manufacturing and even front-end client during which time they spend 7-10 days
knowledge. But retail was not our domain on average at the client offices every month.
expertise and we had no practical experience,” “In small businesses a large chunk of capital
recounts Sanjay Dalmia, president, Prateek goes into salaries of the senior management.
Apparels. We get paid a fraction of the salary bill of a
senior resource and in return we take equity of
An economy growing at 9% levels had 5-26% in the business,” says Srivatsan.
ensured that most of the top-drawer talent in Compared with the Rs 60 lakh-Rs 1.5 crore
the retail sector was taken by the big retail compensation that a full-time CEO gets,
chains or upcoming ventures. Mr Dalmia was Srivatsan says his firm delivers the goods for
not sure about hiring a retail consulting firm as little as Rs 30-35 lakh. With clients like
either. That’s when he heard about Collabrant Primus and Nandu’s (a ready-to-eat foods
and its unique model of CXO services brand) Collabrant clocked revenues of Rs 3
outsourcing. Mr Dalmia was directed to the crore last year in addition to the equity
company through trusted sources, so things hit holdings which it hasn’t exited so far. This
the ground running. Collabrant co-founder AP breed of CXO outsourcing providers are small
Srivatsan came on board as CEO for Coupon, firms or individuals who come with plenty of
Prateek’s new chain of large format discount years of experience in running companies or
stores. have held senior level positions in large
corporates.
A former marketing head at Nestle India,
Srivatsan, 46, had worked with companies like CFOs available on rent
Gillette, Pepsi and Zip Phone. His mandate at
Coupon was to prepare a business plan and
And the there are the lone rangers such as
roll out strategy including hiring, and
Jayant Tewari who works as a CFO-
implement it. Srivatsan operated on nearly a
onrent. He works out of home, spending 2-3
full-time basis from Prateek Apparels’ offices
days a month at clients’ office as their
for over a year before handing over charge to
CFO. He even sports the visiting card of the
the promoters. Coupon now has six stores in
client Tewari’s client base is mostly small
locations like Hyderabad, Raipur and
businesses within the $ 5 million range who
Kozhikode, and Dalmia is hopeful that 12
cannot afford to hire a specialised hire a
stores will be up by January 2010, taking its
finance head. “If you are a small company
revenues from the current Rs 80 crore to Rs
you cannot afford to hire someone on a full
175 crore.
time basis. You need someone who is
outward facing and into strategy and
Call it a CXO service on tap if you will. For
finance,” says Tewari.
startup entrepreneurs and small business
owners, when the time comes, hiring and
Among Tewari’s clients is A Little World
retaining senior executives can be a costly
(ALW), a mobile technology based
affair. However, when it’s time to scale up,
microbanking company that operates
the choice is between attracting seasoned
across India. In 2005, when ALW was into
professionals at very high salary levels or
its fifth year of operations developing
staying small.
mobile payment technology, it was a 20-
“In India unfortunately the supply of startup
member team with zero revenues. That’s
CEOs is limited,” says Alok Mittal, managing
when its CFO quit to join an investment
director at Canaan Advisors, a VC firm. Into
bank. “We were looking partly at a stop-
this gap, comes in companies such as
gap arrangement. And we needed someone
Collabrant that offer CFO, CMO and even
with experience who could handle
negotiations with US-based VCs,” says
founder Anurag Gupta.
He approached Tewari for the role. “One of
the best law firms in the US in the IT space
was negotiating on the other side. Jayant
was a big influence on the transaction and
we were able to argue our case well.”
Today ALW is 800 people strong with Rs
20 crore revenues.
There is also the outsourced marketing model
offered by CMO Axis. Its promoter Vinod
Harith previously headed marketing
communications at Wipro and later with iGate
and Hyundai in an 18-year career where he
started as brand manager for Medimix, “In
today’s economic conditions, marketing is the
first thing that’s axed,” he says. So Harith’s
firm offers what he calls a “CMO office”
rather than an individual. “We offer a shared
services model. Lot of SMEs don’t have a
marketing team. They are wary because of
costs and the support system needed. Once
they focus on marketing, it suddenly begins to
look like a bigger investment than they had
imagined.”
The areas that CMO Axis focuses on are
either resource intensive or involve emerging
technologies and new skills, such as sales
support and new media. CMO Axis launched
in June 2008 and has a 20-member team now.
It did revenues of Rs 1 crore in its first year
and has a few blue chip IT clients, which
Harith declined to name due to non-disclosure
agreements. Recently, the firm signed on a
client in the white goods business (UPS,
refrigerators etc) for devising and executing a
complete online strategy. “You need
implementation capability. SMEs look for
someone who can take their headache away,”
says Harith.
CXO outsourcing is yet to attain critical mass,
and issues of confidentiality and IPR remain.
Dalmia admits there’s no system in place to
address this aspect but adds that Prateek
Apparels’ contract with Collabrant included a
three year lock-in period during which the
outsourced CEO will not offer his services to
another client in a similar business.